JL Collins’ Stock Series – Basically everything you need to know about investing. I haven’t decided if I agree with 100% of what he says but Mr. Collins does a solid job of breaking down investing into to simple, easy to understand terms.

Last week, I gave a simple example of how Social Security benefits work. Today I’ll explain the Social Security claiming strategy that many couples have used to increased their combined Social Security benefit. The strategy has 2 parts: Part 1 is called File & Suspend and Part 2 is called Restricted Application for Spousal Benefits.

File & Suspend must happen first. In my previous example, Wife was only allowed to take that extra spousal benefit because Husband started taking his personal benefit already. He took it at age 66, giving up the 8% growth that he could’ve gotten on his benefit each year he waited till age 70. With the file & suspend strategy, Husband does NOT need to start taking his benefit in order for Wife to start taking a spousal benefit. All Husband would have to do is call the Social Security office and tell them that he wants to file and immediately suspend his benefit so that his wife can start taking a spousal benefit. Once this step is done, Wife can now do step 2, which is call the Social Security office and tell them she would like to file for a restricted application for spousal benefits.

Like the previous example, she now gets to collect a spousal benefit (half of Husband’s personal benefit), while continuing to delay her own benefit and earning that 8% growth each year.

When Husband turns 70, he has delayed taking his benefit as long as Social Security will allow and will start taking his now increased benefit. When Wife turns 70, she will switch from taking her spousal benefit to taking her own (also increased) benefit. Together, they will each be collecting their maximum benefit in addition to having collected a spousal benefit for 4 years.

Sadly, this strategy will go away starting April 29th of this year (2016) with only a handful of exceptions. Come back next week to find out who gets grandfathered in and what steps they’ll need to take before the April deadline to secure this benefit!

The Budget Act that Obama signed late last year eliminates a major Social Security claiming strategy currently available to retirees.

To understand what’s going to change, you should first know how Social Security benefits work. It’s a complicated system so I think the best way to understand it is by seeing it played out in an example:

Husband and Wife are both currently 66 years old. Since they have reached their full retirement age, they can start collecting their Social Security benefits. However, if they choose to delay taking their benefits, it will grow by 8% each year until they reach age 70 (that’s the latest you can delay till).

But let’s just say Husband decided to take the money now (at age 66) because he needs it to pay for expenses. By him taking his benefit, he activates the spousal benefit, which now becomes available to Wife. The spousal benefit equates to half of his benefit. So if he is collecting $2,000/month, she gets to collect a spousal benefit on top of that of $1,000/month.

The nice thing about this is, if they don’t need more than that combined total of $3,000 a month right now, Wife can still delay taking her own personal Social Security benefit, letting it grow that 8% a year. Once she turns 70, she will switch from taking a spousal benefit to taking her increased personal benefit. (Unfortunately, you can’t take both.)

That was a very straightforward and simple example of how claiming Social Security benefits works. There are, of course, a ton of other more complicated scenarios like if they were different ages, if they were divorced, if they were single instead of married, etc. But, one thing at a time.

Next week, I will talk about the awesome claiming strategy some people have been using to increase their combined benefit even more. And the week after that, I’ll explain how the Budget Act changes this strategy and which people are the exceptions to the rule.

The best time to get on-top of your finance is any time, really, but people are most motivated at the beginning of a new year. So here is a step-by-step guide for those of you who’ve made getting on-top of your finances one of your 2016 goals but don’t really know where to start:

Step 1) If you’re working and have a 401(k), find out if your company has a 401(k) employer match and make sure you are contributing at least up to the match. If they match up to 3% of your salary, then start contributing 3% of your salary to your 401(k). The reason this is step 1 is because this is FREE money you’re leaving on the table. Side note: It helps to know your company’s vesting schedule.

Step 2) This step can actually be done in conjunction with Step 1. Find out if your company has a Roth 401(k) option. If they do, get it set up and start contributing to your Roth 401(k) instead of your regular 401(k) UNLESS your company doesn’t match Roth contributions. In that case, contribute to your regular 401(k) first (up to the match) and then the rest into your Roth 401(k). Reasons why a Roth is usually better for millennials can be found here.